Refinancing a Car Loan: Pros and Cons

Has your financial situation changed since you applied for financing, but you’re still dealing with the same old plan? You can refinance a car loan at O’Brien Hyundai of Normal and adjust the terms so it fits your new credit better. However, it may leave you in the same spot, so make sure it’s right for you.

When Should I Refinance My Car Loan?

If your credit history has significantly improved since you applied for financing, refinancing can be your ticket to a lower interest rate. That means spending less money over the remaining term of your loan. It can also be a way to shorten or lengthen your lease term, if the current plan is no longer working with your budget.

When Is Refinancing a Car Loan a Bad Idea?

There’s nothing magic about refinancing—if your income and credit hasn’t changed much, you’ll get similar offers. In addition, when comparing plans, make sure to include refinancing fees and any applicable pre-payment penalties. Refinancing counts as “paying off” your old loan, so you may have to pay any early payment fees, which may cost more than you’re saving.

How Do I Refinance a Car Loan?

At its core, applying for refinancing is identical to your initial loan process. You’ll need to bring in any paperwork proving your income and residency and apply through our team or another refinancing portal. If you currently have negative equity on your car, also known as being “underwater” on your loan, that can further restrict the number of financers who will extend an offer.

Refinance Your Car Loan at O’Brien Hyundai of Normal

If you’ve built your credit since your first test drive, refinancing can be a great way to save over the course of your loan. Find out more with our team at O’Brien Hyundai. We’ll help you compare your options and determine whether refinancing is the right fit for your goals and financial situation.